Plans for a new dam are under consideration to protect the Panama Canal from climate change. The project, which was first proposed two decades ago, is considered as being the most viable option for the canal’s survival, with climate change being blamed for ruining this important navigation channel.
The 82km long Panama Canal connects the Atlantic and Pacific Oceans and is an important shipping channel through which 3% of global maritime trade passes. Cutting though the middle of Panama, it avoids an additional journey of 13,000km around the tip of South America and links 180 routes that reach over 1900 ports in 170 countries.
In 2024, the canal’s celebration of 110 years of operations coincided with what has been described as an historic challenge which impacted operations. Throughout the year, Panama faced a prolonged drought which was said to be so severe the Gatun and Alhajeula reservoirs, which feed the canal, were at their lowest levels in history.
In order to ensure water could still be supplied to the growing Panamanian population of over four million people, the Panama Canal Authority implemented a water resource management strategy and says it remains committed to improving reliability, efficiency, and its responsiveness to the changing needs of a maritime industry.
Aware of its important function of ensuring citizens have drinking water, the canal authority explains this is why it is considering constructing a multipurpose reservoir to compensate for the amount of water extracted from the canal’s reservoir system.
As Panama Canal Administrator, Ricaurte Vásquez Morales, explained: “In Panama, we have a high dependence on rainfall, and it is necessary to increase storage capacity to ensure drinking water and transit water. In the operation of the canal, including the third set of locks [when the canal was expanded in 2016], we use the volume of water that was forecast for that purpose, whereas the consumption of the population increases permanently.”
The construction of a reservoir in the Indio River basin is believed to be the most viable option for the “development of a technically endorsed project that will meet future water demands for human consumption”.
New dam
To help combat drought and ensure there is sufficient water for lock operations, the Panama Canal Authority is making plans for a 90.5m high and 840m long dam on the Rio Indio. The project will also involve the construction of an 8km long tunnel to connect it to the existing Gatun Lake, with the new 1.25Bm3 reservoir allowing up to 15 additional vessels to pass through the canal during the dry season, as well securing sufficient drinking water for the local population. If approved, the dam could be completed by 2030.
The US$1.6 billion project is considered to be the best solution to the increasing urgency of the problems caused by climate change. The changing El Nino weather pattern has extended the dry season and will create more frequent droughts in the future – a concern for the country listed as the fifth worldwide with the most precipitation. However, other ways to manage drought are also being looked into, including dredging, moving water intakes to different locations, and controlling salinity.
Recent droughts have impacted canal operations with about a third less ships being able to pass through in the year up to September 2024. This has led to ships having to queue for weeks or paying fees as much as US$4 million to queue jump. The rates ships must pay to use the canal are reported to have soared in recent years due to droughts drying up the reservoirs and reducing the canal’s capacity. With the US being the canal’s biggest customer, President-elect Donald Trump has recently expressed his dissatisfaction with the situation and the exorbitant fees being charged.
Concern has also been expressed by local farmers and communities who will be inundated by new reservoir construction. Initial estimates suggest over 2200 people will need to be relocated, with 2000 more being impacted within the reservoir zone. Before undertaking any initiative, the Panama Canal Authority says the needs and concerns of those living in that region must be addressed.
